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The Bank of Canada's holdings of treasury bills and repos have unwound to about where they were before markets froze up last year as the pandemic spread worldwide, leaving QE worth CAD3 billion a week as the main driver of the central bank's balance sheet.
Repo assets declined to CAD34 billion this week, down from CAD153 billion at the beginning of March. Those holdings had swelled to CAD211 billion in June of last year amid a global market dash for cash.
Similarly, the surge in t-bills as governments ran record deficits has faded away, largely because finance departments shifted their borrowing to longer-term bonds. The BOC's bill holdings were CAD27 billion this week, down from a July peak of CAD140 billion and in line with where they were in April 2020.
Governor Tiff Macklem said Thursday that while QE has been effective at helping boost the economy and get people back to work, it may also be widening gaps in household wealth. The BOC last month tapered QE for a second time from the original CAD5 billion pace citing a stronger than expected rebound. Some investors see more tapering in coming quarters, though MNI has reported outright sales of bonds back into the market is likely too aggressive.
The overall balance sheet is now CAD478 billion, down from the March record of CAD575 billion.
Source: Bank of Canada